PAYE scheme needed or declare on a tax return

Client offered an employed role by business with no UK establishment

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Hi Everyone

This is a new one on me.  I have a client who has been offered an employed role (it must be employed by them) by a business with no UK establishment.  They do not want to set up a UK business either.

He will beased in the UK still as all his work is digital.

Is it possible for a non UK business with no establishment i the UKL to set up a PAYE scheme?

Does my client need to set up his own PAYE scheme and run the tax and EEs Ni through that.  What about the employers NI?

Does it just need declaring on his UK tax return?

Or is there a hybrid of the above!

I have searched online and can not find a clear answer.  I have called HMRC and am waiting on a call back, however this could take a while and we need some indication of what is needed sooner.

Anyone else come across this and have an answer? Surely more and more people will be in this situation with more Digital work.

Thanks

Replies (8)

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By jonharris999
14th Feb 2022 14:44

Have you looked at Direct Collection for PAYE?

Client can do it themselves, or if they don't want to (and employer will pay), lots of payroll outfits offer it.

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Replying to jonharris999:
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By Hugo Fair
14th Feb 2022 16:03

Well, at the risk of sounding big-headed, I've been involved in Payroll systems (amongst other things) for over 30 years ... and have never come across DPNI or DCNI schemes before - but am happy to continue learning!
I'm more intrigued by your comment that "lots of payroll outfits offer it" - could you name a few (I'm genuinely interested)?

BTW all the info I can find on that nightmare source (GOV.UK) is undated but must be fairly ancient, because it contains lots of references to maintaining a P11 working sheet and completing a P14 at EoY!
So do you also have an up-to-date source for how any comparable scheme now operates in this RTI world?

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Replying to Hugo Fair:
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By jonharris999
14th Feb 2022 16:41

https://www.gov.uk/guidance/when-and-how-an-employee-operates-paye-on-th...

@Hugo, I am not entirely comfortable advertising other firms' services here. If they are here, they can speak for themselves. My comment was based on the fact that this time round I have prepared several SA returns, each of them with a different firm providing this service for overseas employers with only 1 or 2 staff in the UK, no permanent establishment and no wish to have one in the UK.

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Replying to jonharris999:
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By Hugo Fair
14th Feb 2022 18:34

Fascinating.
It's all entirely logical - I just never encountered it before (presumably as all my payroll clients are large organisations and most certainly have a UK presence) ... but I'm always up for a bit of learning!

Although the GOV.UK links (and subsequent PAYE Manual pages) are not exactly comprehensive (nor nicely structured so as to make it easy to pull all the details together) ... it doesn't look like it should be a problem for most software packages to operate compliantly (whether or not they claim to support the schemes), so I'm sure you're right about available options.

It's nice to have had a break from 'the usual' PAYE questions ... and even better (selfishly) to have increased my sum knowledge for the future!

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Replying to jonharris999:
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By Fidodido
14th Feb 2022 16:12

Thanks - This is one area I found some details on and think it will be the option we will go down.

HMRC have actually just sent me the questionnaire for the Direct Payment scheme.

Thanks for your help

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paddle steamer
By DJKL
14th Feb 2022 15:04

Post his employment starting could the overseas business by mistake have created an establishment in the UK that they possibly do not want?

Edit- see this to consider if on point.

https://www.rsmuk.com/ideas-and-insights/global-mobility-em/what-is-a-pe....

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Replying to DJKL:
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By Fidodido
14th Feb 2022 16:13

We have looked in to this and believe there will not be an establishment due to the nature of work involved.

Thanks for help

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By HiddenAccountant
15th Feb 2022 09:44

We had a USA company contact us about 5 years ago, asking for advice about paying employment taxes.
They were employing a UK employee.
We tried going through the online PAYE registration to see if there were options to register a foreign company and got stuck at the director's NI number.

Called the PAYE helpline for advice and they said that's not a problem and agreed to register the PAYE scheme over the phone with only the company name and our address.

We have since continued processing this payroll and also setup a pension scheme for them (NEST).
Company pays PAYE directly to HMRC from overseas account and employee net wages.
NEST required a direct debit if I recall correctly so the employee agreed to setup DD from their account and employer reimburses them for it every month.

Not sure if the whole setup is entirely correct but certainly a practical solution and HMRC are not losing out.

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